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XLK includes companies from technology hardware, storage, and peripherals; software; diversified telecommunication services; communications equipment; semiconductors and semiconductor equipment; internet software and services; IT services; electronic equipment, instruments and components; and wireless telecommunication services.
“The strong relationship between the U.S. and China in technology is driven in part by global supply chain needs for components such as semiconductors and hardware such as smartphones, along with China’s articulated drive to develop a vibrant indigenous technology sector,” said Fitch. “However, U.S. technology firms have increased diversification across end markets, which strengthens credit profiles for certain categories. Technology firms generating significant revenue from China include Texas Instruments, Flex Ltd, Intel, Western Digital, and Jabil.”
China is on a path toward an ambitious reform agenda focusing on the quality of growth instead of relying on quantity, including environmental protection, continued cuts to excess capacity and reducing excessive credit growth.
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